Document Type

Case Study

Case Series

Broad-based Capital Injections

JEL Codes

G01, G28


At the start of 2014, the Russian Federation had experienced several years of decelerating growth rates as a result of weak investment, poor governance, and failed structural reforms. During 2014, the dual shocks of rapidly declining oil prices and increasingly stringent international sanctions led to significant financial instability, as Russian firms lost access to international markets and net capital outflows accelerated. As part of the response to this crisis, the Russian government unveiled a RUB 1 trillion (US $17.2 billion) bank capital support program, which it later revised down to RUB 838 billion. The program, operated by the Deposit Insurance Agency (DIA), exchanged government bonds (OFZs) for either preferred shares or subordinated debt from large banks, banks affected by the sanctions, or major regional banks. The DIA required banks to increase lending to certain sectors in the real economy by 1% a month for three years, as well as freezing executive compensation and raising private capital of 50% of the amount of support provided by the DIA. The DIA concluded agreements with 34 banks for the exchange of RUB 838 billion in OFZs, with over RUB 628 billion in OFZs still in place at those institutions as of October 2019. Government auditors reported that the program transferred RUB 261.3 billion to the federal budget by the end of 2019, as a result of eleven banks ending their participation in the program, with the four banks merging with others. The Russian government claimed the intervention was a success, noting that lending to the real economy increased by 65%.

Date Revised